House prices will rise 4.7 per cent during the course of 2015 the Centre for Economics and Business Research says, a far higher figure than it previously predicted.

In March, the economic forecaster said values would rise by a modest 1.5 per cent. Its change of tune would mean the average property hitting a record high of £260,600 - up from £217,100 five years ago.

It says a 'chronic lack' of properties being listed for sale has pushed up prices in recent months and is one of the main reasons behind the upward revision to the forecast.

Chronic shortage: The Cebr says the lack of homes coming onto the market is pushing up prices

Yesterday property website Rightmove said that the number of homes being put up for sale was down 10.6 per cent in the month to mid-July on the same period last year, but enquiries to agents were up 22 per cent.

The Cebr expects house prices inflation to stand at a smaller 3.4 per cent in 2016 and 4.4 per cent in 2017.

Over the course of this parliament, it believes house prices will rise 23.6 per cent, bringing the average price of a home to £321,000 in five years' time.

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The projected annual rises are still far lower than experienced last year, where prices increased 10 per cent - the highest level since before the financial crisis.

According to the Cebr, the average house price stood at £217,100 five years ago. If property prices reach its 2020 projection, the average home would have added £103,900 in value over the course of the decade.

Nina Skero, Cebr economist, said: 'With the possibility of higher taxation on prime property and intervention in the rental market less likely, the Conservative Party's victory in the general election will likely support stronger price growth in the second half of 2015.

'Prices will also see a boost from the lack of fresh properties coming on the market.'

PROPERTY PRICES: CEBR FORECAST

Year

Average UK house price (£)

Year-on-year change

2010

217,100

7.20%

2011

215,100

-1.00%

2012

218,600

1.60%

2013

226,400

3.50%

2014

249,000

10.00%

2015

260,600

4.70%

2016

269,500

3.40%

2017

281,400

4.40%

2018

295,400

5.00%

2019

307,600

4.10%

2020

321,000

4.30%

While the London housing market was a key driver of growth in 2014, the Cebr expects average prices in the capital to increase by just 3.7 per cent this year - less than the rate of growth for the UK as a whole.

Although the Conservative victory at the general election also means that a mansion tax is now off the table, the prime end of the London market has been dragged down by last December's stamp duty changes, which pushed up the cost of purchasing luxury property.

Skero adds: 'In London, average house prices are being weighed down by the prime end of the market.

'A strong pound which makes London property less affordable for foreign buyers and December's decision to increase stamp duty on properties valued above £1.1million are both deterring some prospective buyers.'

Additionally, housebuilding is expected to continue falling short of what is needed to keep pace with population growth the Cebr says, which is another factor in property prices increasing.

It comes after it was revealed by the Office for National Statistics last week that house prices are now £57,000 higher than the peak seen in May 2008 just before the financial downturn prompted a dramatic collapse in the property market.

The ONS says the average UK property value on its index now sits at £274,000, which is equal to the peak reached in August last year.

According to historic ONS data, house prices were £217,000 in May 2008, before falling to a low of £187,000 in March 2009. It means nearly £90,000 has been added to the average UK house in just six years - a rise of 50 per cent.

The Cebr says its estimation is lower than the current recorded ONS figures because its forecasts look at mix-adjusted prices which aim to capture the price of a 'typical' property, rather than the ONS average price which can be influenced by extremely high value homes.